Food Product Development - Chapter 6 - Managing the product development process

Top management and often the directors on the company Board handle the critical decisions between the stages. Basically there are two decisions:

Do we go on or stop the product development?

What resources does the company put into further development?

During Stage 1: Developing the product strategy, there are another three critical acceptance decisions - does the company accept the product strategy, the innovation strategy and the product development programme?

In the first stages of product development, Urban et al. (1987) identified the important top management decisions as: commit company to new products, approve PD Process and budgets, product portfolio and market strategy. Before product design, there was a review of market entry strategy and then after product design, review and commit to test, followed by go/no-go decision and review launch plan. They noted that after launch the important decisions were approve one- and five-year plans and finally approve strategy to 'milk' or 'rejuvenate'. The general critical decision points for top management are shown in Fig. 6.4, and some additional decisions for radical innovations are shown within Stages 2, 3 and 4.

Because of uncertainties in radical and some major product changes, there can be changes in the product concept during design, changes in processing which need design and building of new equipment, changes in the storage conditions which alter the distribution method, and changes in the target market which need product or marketing alterations. These uncertainties need to be recognised at the beginning and the additional critical decision points they introduce included in the PD Process. In incremental new products, it is unlikely for top management to be involved in decision making within stages unless there are unusual problems that could for example cause disharmony with company ethics or cause time and costs overruns.

Senior management needs to review the right information at the right time to make the right decision. It also needs to make its decisions quickly, so that the project is not delayed while people wait for decisions. If the project is allowed to proceed to prototype product or to product commercialisation before the top management decision, it may be too late to stop the project even though it will need more development and therefore more resources. But management must not get directly involved in 'fighting fires' on products that are late or have problems. By this time most of the major decisions have been made by other people, and the real impact of top mangement involvement is minimal. The decision makers at this stage are the technical and marketing people who have the knowledge to solve the problems. If major problems occur, the project leader is responsible for reviewing the project and for devising a solution that can then be reviewed by top management, who make the decision to proceed or kill the project. Several important aspects for top management reviews are (McGrath et al., 1992):

to provide a clear and consistent process for making major decisions
on new products and improvements;

to empower project teams to execute a project plan;

to provide the link for applying product strategy to product development;

to provide measurable checkpoints to monitor progress;

to establish milestones that emphasise a sense of urgency.

For all these critical decisions by the directors and senior management there is a need for knowledge, much of which is in the outcomes of the various stages within the PD Process. If the critical decisions and the knowledge needed to make these decisions are clearly identified by top management, during design of the PD Process framework at the beginning of the individual projects, the product development team knows what information it has to produce and in what form. There also needs to be a warning system in place for resource or time overruns or difficult problems impeding progress in the project.